The Ministry of Planning and Investment is offering SMEs in Vietnam loans at preferential interest rates of 1.2-4.4% per year within the Small- and Medium-sized Enterprise Development Fund.

With assistance from the fund, SMEs can benefit from favourable lending interest rates starting at 1.2% per year for short-term working capital loans and 4.4% per year for medium- and long-term loans. 

The maximum loan duration is seven years, with a two-year interest grace period. The maximum loan amount is set at 150 billion VND, with a minimum loan amount of 300 million VND.

Furthermore, for collective economic organisations, such as production cooperatives, an annual fixed loan interest rate of 5.13% will be applied, with a five-year maximum loan term and maximum loan limit of 100 billion VND.

SMEs in Vietnam said that this policy is practical and meaningful as it provides them with the necessary financial resources to initiate a business or expand their production scale, Vietnam Plus reports.

According to Phan Thanh Ha, the fund's director, the fund has already signed framework contracts with six commercial banks, including BIDV, Bac A Bank, HD Bank, Military Bank, SHB, and Sacombank, to undertake indirect lending.

According to Government Decree 39/2019/ND-CP concerning the organisation and functioning of the Small and Medium Enterprise Development Fund, alongside indirect lending regulations, SMEs are mandated to submit their loan applications at bank transaction offices or via postal services. 

The fund director added that banks are entrusted with the task of receiving loan applications from SMEs, evaluating them, and subsequently making lending decisions for eligible SMEs.

Ha stated that by the end of 2023, the fund had opted to transfer capital to banks for the provision of indirect loans to 39 projects, amounting to a total of 682 billion VND. 

Established in 2019, the Small and Medium Enterprise Development Fund operates as an off-budget financial fund with a non-profit orientation. Its main objective is to enhance the competitiveness of SMEs, thereby fostering income growth and job creation for workers. Additionally, it aims to strengthen the effectiveness of State capital management in supporting SMEs.